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WASHINGTON — The stakes of the Central American Free Trade Agreement are higher than just textiles and sugar — the two big U.S. constituencies that have opposed the agreement.
Hanging in the balance are social structures and nascent democracies in Central America, said the presidents of the Latin American countries, who were in Washington last week pushing CAFTA.
The leaders made stops at 10 cities, Capitol Hill and the White House, painting the agreement as a struggle to maintain democracy in the region and shore up shaky economic foundations.
On the tour were the leaders of the Central American countries Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, as well as the Caribbean nation, the Dominican Republic.
“Approving DR-CAFTA will create new hope in our nations,” President Leonel Fernandez of the Dominican Republic said in the wood-paneled Hall of Flags at the U.S. Chamber of Commerce last week.
The event was part pep rally, part preamble to a meeting with President Bush later in the week.
“Democracy up until now has not been able to deliver,” said Fernandez, noting that CAFTA is needed to shore up the country’s fragile economy.
The U.S. market was initially opened to the region by the Caribbean Basin Initiative, which promoted a switch from agricultural exports to manufacturing.
“Having this access to the U.S. has truly transformed the nature of our economies,” said Fernandez.
That access expires in 2008, though, and CAFTA is needed to make permanent reciprocal trade possible, he said, acknowledging that the agreement is also a tough sell to farmers in the region who are scared of losing their jobs.
“Your neighbor, Central America, needs CAFTA,” said Nicaraguan President Enrique Bolanos. “I care for CAFTA because it’s good for my country. It’s good for my people.”
He pointed out that Nicaragua has an unemployment rate close to 40 percent and lags other Central American countries economically.
Honduran President Ricardo Maduro highlighted the importance of the agreement at an earlier stop on the tour in Miami.
Earlier this month, a small plane carrying Maduro lost power and crashed into the Atlantic Ocean near a beach in Honduras. As the plane fell, Maduro, according to a report in the Miami Herald, said his unfinished agenda ran though his mind and CAFTA was at the top of the list.
This story first appeared in the May 17, 2005 issue of WWD. Subscribe Today.
The presidents have the backing of the Bush administration, which is trying to shore up support for the agreement in Congress.
“CAFTA is ultimately about freedom and economic opportunity,” said U.S. Trade Representative Robert Portman, at the Chamber of Commerce event.
“Violence and civil war were part of life in many of these countries,” said Portman of the not-too-distant past. “Now they want to strengthen the foundations of democracy. It is the opportunity of a lifetime. We must seize that opportunity.”
CAFTA builds a more permanent relationship that companies can depend on, said Stephen Johnson, a senior policy analyst for Latin America at the Heritage Foundation.
“It helps your neighbors be more prosperous at a time when competitive advantages are very slim,” said Johnson, pointing to the lower wages paid in Asia as compared with Central America. “They need something to be competitive, and if they’re not competitive and businesses can’t function, then they’re going to be sending their unemployed to the United States.”
Ed Gresser, trade policy director at the Progressive Policy Institute, said countries in the region, particularly the Dominican Republic, El Salvador and Honduras, have become successful clothing exporters to the U.S.
“They have used the clothing industry to really help build up their societies,” he said, noting that permanent access as opposed to periodic reviews is important to the countries, especially given the ascent of China as a manufacturing powerhouse.
“They feel the environment is changing around them, and it’s a pretty major thing they have at stake,” said Gresser.
The success of the CAFTA presidents’ lobbying efforts remain to be seen, but the Chamber’s senior vice president for international affairs, Daniel Christman, was encouraged by the crowd last week, which included five of the six Latin American presidents, Commerce Department secretary Carlos Gutierrez, several congressmen, Portman and business leaders.
“We now have CAFTA critical mass,” Christman said. “Let’s take it across the goal line. We have a choice: two paths, two futures.”
If approved, the fragile economies of the Latin American countries taking part in CAFTA would get an economic boost from the more-open markets, he said.
“If CAFTA is defeated, hundreds of thousands of jobs will be lost,” he said, adding that the countries “will view it as a kick in the teeth.”